CSR in Ukraine

Country-Specific Fact Sheets. CSR Europe’s National Partners’ Network Collaborative Initiative

  1. Introduction to the Political Economy of the country:

Ukraine, a country in Central and Eastern Europe, has an area of 603.628 km², being the second largest country on the European continent. Ukraine’s 2011 GDP is ranked 39th in the world and estimated at $327.4 billion. Its GDP per capita in 2011 was $7.200, ranked 131st in the world. Ukraine has a very large heavy-industry base and is one of the largest refiners of metallurgical products in Eastern Europe. Unemployment rate in Ukraine, according to the official statistics, is 7.9%, most people (65.7%) in Ukraine are employed in the service sphere. After financial downturn Ukraine’s growth resumed in 2010 due to exports[1]. According to official data of the State Statistics Committee, total foreign investments in Ukraine were valued at over US$ 10 billion. The United States accounts for 22% of the total and Germany is second at 19%. Within the new and challenging Ukrainian commercial environment, about 50.000 U.S., Canadian and European companies are currently active in the market, either as investors, exporters or importers. The most technologically advanced and competitive fields of Ukrainian economy still remain steel and pipes, confectionary, alcoholic beverages, agricultural products, equipment and machinery[2]. Besides, recently Ukraine has had the highest IT sector industry growth rate among Central and Eastern Europe countries, with almost 40% growth.

The SME s sphere in Ukraine is characterized by rapid growth. For 16 years (since 1991 to 2007) number of SMEs has grown sevenfold[3]. SME share in the gross domestic product (GDP) in Ukraine is 30%[4].

2.    CSR policy/legislation:

There is no state law or other legal acts related to CSR in Ukraine. National CSR Strategy Concept, initiated by Ukrainian Global Compact network in Ukraine and Centre for CSR Development Global Compact and Centre for CSR Development and supported by NGOs, companies, Universities, has recently been drafted. The draft went through the procedure of public discussion and now has been sent to Presidential Administration.  In the near future, this document may become a base for national CSR policy development in Ukraine.

There are other important laws that refer to different CSR spheres such as National Labor Code, Consumer Protection Law, and Environmental Protection Law. Also, Ukraine has a Law on Charity and Charitable Organizations and a Projected Law on Civil Society in Ukraine.

3.      Introduction to CSR in the country:

  • Key Drivers/areas of CSR:

The main CSR drivers in Ukraine currently are labor practices (including human resource development, workplace safety), consumer health protection and safety[5].

Main actors in Ukraine in terms of CSR

  • Centre for CSR Development – www.csr-ukraine.org;
  • Global Compact Network Ukraine – www.globalcompact.org.ua;
  • CSR Committee in European Business Association – www.eba.com.ua;
  • СSR Committee in American Chamber of Commerce in Ukraine – www.chamber.ua;
  • CSR Ukraine Community – www.svb.org.ua;
  • East Europe Foundation – www.eef.org.ua.
  • Center for Business and Society Cooperation – www.vbocenter.org
  • Degree of Public awareness and understanding on CSR:

The research “Corporate social responsibility 2005-2010: status and development perspective” conducted by Centre for CSR Development under UNITER support has demonstrated that the total CSR awareness rate among Ukrainian companies is 76.3%. The social responsibility of a company is normally seen as providing charity assistance to community; development of the company’s personnel; fair business practices; protection of human rights. According to this research, the social responsibility awareness has not practically changed in comparison with 2005. The number of companies for which social responsibility means only charitable activities has remained quite high for the last five years[6]. Although for companies which started CSR implementation 5 years ago, CSR has been mainstreamed into business strategy (e.g. DTEK[7], Metinvest[8], Kyivstar[9]).

  • Role/Involvement of the Media:

Role of media in promoting CSR is highly important. There are few business magazines in Ukraine that highlight information about CSR and CSR events. Since 2008, Gvardia magazine[10] conducts an annual CSR ranking among companies in Ukraine of different industries (FMCG, Infrastructure markets, Holdings, Services, Financial and Industrial sector). Also, DELO portal has a special standing head – “Corporate social initiatives”[11] where it systematically publishes articles on CSR in Ukraine. There are two specialized Internet media that concentrate on CSR – analytical portal CSR Review[12] in English and Russian and CSR Journal[13].

4.      Environment

Ukraine has a Law on Basic Principles of State Environmental Policy of Ukraine till 2020. This document aims to improve the environment in Ukraine and covers 7 strategic goals:

  • To raise public environmental awareness;
  • To improve the environmental situation and enhance environmental safety;
  • To achieve the safe state of the environment for human health;
  • To integrate the environmental policy and improve the system of integrated environmental management;
  • To stop the loss of biological and landscape diversity and establish eco-networks;
  • To provide environmentally sustainable management of natural resources;
  • To improve regional environmental policy.

This document has CSR related instruments for National environmental policy implementation. One of these instruments is partnership and stakeholder engagement.  Environmental audit is aimed at improving the ecological validity and effectiveness of the entities set objects under environmental audit requirements environmental legislation[14].

Despite that, environmental responsibility is not popular aspect of social responsibility among Ukrainian companies. According to the results of survey “Corporate social responsibility 2005-2010: status and development perspective”, half of national companies don’t implement environmental protection practices. The most common environmental responsibility practices include promotion of energy saving technologies and programs of waste sorting and recycling.[15]

  • Main Environmental Challenges in the country

Anthropogenic and technical load on the environment in Ukraine is several times higher than corresponding rate in developed countries. In terms of water management and water quality Ukraine, according to UNESCO, is ranked 95th among 122 countries. Another environmental challenge in Ukraine is the quality of water. Drinking water supply in Ukraine up to 80% is the use of surface water. However, almost all surface and much of the underground water is polluted. In Ukraine there is a high risk of natural and man-made disasters. In Ukraine there are 23,767 potentially hazardous enterprises and other objects, accidents at each of which can lead to emergency situations of industrial and natural character of the state, regional, local level[16].

  • How is the issue of energy efficiency being dealt with?

Energy intensity in Ukraine is around three times higher than in the EU. This means that on average, Ukrainian companies use three times as much energy to produce the same output as companies in the European Union[17]. Energy efficiency and alternative use are important for Ukraine’s economy and nowadays the issue of energy efficiency is promoted by the leading Ukrainian companies. For example, DTEK implements energy efficient technologies in its partner towns within the Social Partnership program[18]. In April 2011 SCM initiated an energy efficiency ranking of Ukrainian regions, Ukrainian Energy Index. The Ukrainian Energy Index showed the efficiency of energy use by each Ukrainian region on the current stage of its economic development[19].

Regional offices of international organizations (UNDP, World Bank, EBRD, and USAID) also implement energy efficiency projects in Ukraine.

Two major state regulations in the sphere of energy efficiency are the Energy Strategy of Ukraine for the period up to 2030 (the “Energy Strategy”) and the State Special-Purpose Economic Program for 2010-2015. These documents were adopted to solve the energy efficiency problem in long-term prospective.

  • Public awareness/concern on Environmental issues:

According to the Survey on Climate Change Perception, conducted by Global Compact Network Ukraine in 2009, 90% of respondents stated that environmental protection is important for them when answering the direct question about importance of this issue. 60% of Ukrainians consider themselves to be well informed or informed enough about global warming or climate change problems. At the same time, if pollution problem is compared with the other challenges, the majority of Ukrainians are naturally more concerned with economic problems (72%), political instability (43%) and absence of legitimacy (42%). Environmental pollution as well as health care services were chosen as the main problems by 27% of population[20].

5. Supply Chain:

In Ukraine, issues of responsible supply chain management are not widespread and are rarely taken into consideration while procurement procedures. At the same time, additional criteria in customers’ contracts and social audits are becoming a reality for many Ukrainian companies and the importance of non-price competition will become more important in the near future[21].   In January 2011 17 companies and organizations have signed the Declaration on Responsible Business Partnership that aims to promote ethical procurement practices among Ukrainian business and non-governmental sector[22].

As for the state policy in this sphere, Ukraine had adopted a comprehensive Public Procurement Law in June 2010. This law sets legal and economic principles on public procurement conducting. This document pays attention to ethical principles while public procurement. Also, the Law includes preventing of corruption acts and promoting openness and transparency at all stages of public procurement.

6. Human Rights:

Ukrainian companies, within this issue, focus mainly on labor rights of their employees. Every fourth company has no special practices for employees, but companies state that they strictly follow labor laws. Collective bargaining and freedom of association are obligatory and well integrated. Only 20% of Ukrainian companies have a program on balance between family and work. The most common practice of work-life balance is offering of flexible working hours[23]. But, despite that, Ukrainian companies implement nice practices, devoted to human rights protection. For example, Auchan Ukraine has developed and implemented the Program for HIV/AIDS Prevention at the Workplace[24]. Platinum Bank has its own Employment Program for People with Disabilities[25].

7. Equal Opportunities:

Ukraine has ratified the Convention on the Elimination of all Forms of Discrimination against Women. Moreover, Ukraine has developed and adopted a Law of Ukraine on Ensuring Equal Rights and Equal Opportunities of Women and Men (2005). With the development of market relations in the country women were able to open their own business. About 50 of all enterprises without employees are woman owned. Enterprises with 1 to 5 employees are 27% woman owned. Enterprises with less than 50 employees are 30% woman owned. These numbers are similar to those in Western economies. Only 2% of large companies are owned by women[26].

Diversity has not been a priority for Ukrainian companies yet, as Ukraine has mostly homogenous population – 77.8% are Ukrainians[27].

8. Community Engagement:

  • What is the perceived role of businesses in the local community?

The results of survey “Corporate social responsibility 2005-2010: status and development perspective” show that most Ukrainian companies (68.1%) believe that business should take active part in solving of social and environmental problems in the society. As compared to 2005, the number of companies believing that businesses should take an active part in resolving social and environmental problems has increased twofold (32.7% in 2005). But, at the same time, big part of these companies is not eager to provide assistance to the regions where they operate[28].

In 2011, Centre for CSR Development launched the development of the Strategic Vision “Enterprise 2020: Role of Business in Society” for companies in Ukraine, where they would take into account social and environmental issues in their long-term business strategies under Metinvest support. This initiative is called Enterprise 2020[29].  The basement for development of this initiative is the CSR Europe initiative “Enterprise 2020”[30] and “Vision 2050” of the World Business Council for Sustainable Development.

  • What is the level of cooperation between local communities and businesses?

Many companies in Ukraine see community engagement as CSR itself. Mostly, such opinion is typical for the state owned companies. Also, in Ukraine there is a number of “company-towns”, with one major company being practically the only employer in the town. Such companies usually provide different social services and strategically support the communities in which they operate. Most Ukrainian companies believe that charitable assistance to the community is an aspect of social responsibility. But, according to the research “Corporate social responsibility 2005-2010: status and development perspective”, only one third of companies (37.5%) make social investments in the community. Most often, social investments are made by large companies, and the priority spheres for social investments are healthcare and education[31].

9. Sustainable Products and Services:

Consumers’ awareness on this subject in Ukraine is low. There were no researches concerning this topic and Ukrainian companies, NGOs and state authorities are not very active in this yet. Despite that, there are some initiatives in this sphere – there is a guide for NGOs, devoted to measurement of sustainable consumption and production results[32]. Among business, this issue is implemented mostly by agricultural enterprises that produce organic products. There are 10 Eco labels, by which Ukrainian companies are certified[33].

There are some initiatives in public policy regarding sustainable products promotion. Last year, Verkhovna Rada, a Ukrainian Parliament, adopted the Law on Organic Production which is aimed to regulate production, marking and certification of organic products[34].

10. Company Best Practices:

Since 2009, Centre for CSR Development organizes National CSR Business Case Contest, where best CSR practices are determined by an international jury. The winners are chosen separately among Ukrainian and international companies. Winners’ cases are devoted to different CSR spheres:

Intel – Development of the Information Society in Ukraine (http://www.csr-ukraine.org/intel.html?lang=en);

Microsoft – Microsoft and the Coalition for Children’s Safety on the Internet Protect Kids Online with “Onlandia” (http://www.csr-ukraine.org/microsoft.html?lang=en);

Kyivstar – The Mobile Culture Program (http://www.csr-ukraine.org/kyivstar.html?lang=en);

System Capital Management – Projects on Education Development in Ukraine (http://www.csr-ukraine.org/scm_case.html?lang=en);

Auchan Ukraine – Program of HIV/AIDS Prevention at the Workplace (http://www.csr-ukraine.org/auchan_case.html?lang=en).

Companies’ business cases are available at: http://www.csr-ukraine.org/cases.html?lang=en

11. Main Challenges Remaining around CSR in the country:

Despite the development of CSR in Ukraine, there are still some major challenges in this sphere. One of them is low level of social responsibility principles implementation among governmental organizations. Unfortunately, there is no state SR policy in Ukraine and governmental organization which would be responsible for its implementation. Also, one of the challenges is to bring CSR to SMEs – small and medium-sized companies state that they have not enough resources to implement CSR. The same problem is with the state-owned companies. According to the research “Corporate social responsibility 2005-2010: status and development perspective” the majority of such companies (90.2%) don’t implement CSR because of the lack of financial resources[35].

About the Centre for Corporate Social Responsibility Development: Leading CSR expert organization in Ukraine, member of the Board in the UN Global Compact (2010-2011), GRI Organizational stakeholder, national partner of CSR Europe (Brussels) and World Business Council for Sustainable Development (Geneva). Organization unites 23 companies in Ukraine. Centre provides consultations on development of CSR strategy, programs and communications, organization of projects’ monitoring and evaluation, preparation and verification of non-financial reporting.

Also, Centre for CSR Development conducts the following activities:

  • Annual CSR MarketPlace, a fair of social and environmental projects implemented by companies, governmental and non-governmental organizations.
  • CSR Readers’ Choice Award – an annual award for the best non-financial report among Ukrainian companies.
  • National CSR Business Case Contest to award best CSR business solutions.
  • Transparency Index for companies in Ukraine (based on Israeli methodology of Beyond Business) – an assessment of companies’ web-site on CSR information disclosure.

Since 2011, Centre launched the CSR Academy initiative that consists of trainings on different CSR issues (non-financial reporting, ISO 26000 implementation, stakeholder dialogue, corporate volunteering, etc.)

Centre for CSR Development publishes different guides that give practical CSR solutions for key stakeholder groups.

More about Centre’s activities and projects: www.csr-ukraine.org

MEMBERS OF THE CENTRE FOR CSR DEVELOPMENT

  1. 3M                                                        http://www.3m.com/
  2. Amrita                                               http://amrita.ua
  3. BDO                                                      http://bdo.com.ua/lang_en-us/
  4. British American Tobacco           http://www.bat.com/global
  5. Danone                                                              http://danone.ua/en/
  6. DHL                                                       http://www.dhl.com/
  7. Ernst&Young                                    http://www.ey.com/
  8. Interpipe                                           http://interpipe.biz/en/company.html
  9. Japan Tobacco International       http://www.jti.com/home/?Culture=en-GB
  10. Lafarge                                                              http://www.gypsum.lafarge.ua/en/index.html
  11. Life: )                                                   http://www.life.com.ua/?lng=en
  12. OTP Bank                                           http://en.otpbank.com.ua/
  13. Platinum Bank                                 http://en.platinumbank.com.ua/
  14. ProCredit Bank                                http://en.procreditbank.com.ua/
  15. SUN InBev                                         http://www.suninbev.com.ua/home
  16. Tetra Pak                                            http://www.tetrapak.com
  17. ViDi Group                                        http://www.vidigroup.com/
  18. DTEK                                                    http://www.dtek.com/en
  19. Кyivstar                                                            http://www.kyivstar.ua/en/
  20. Мetinvest                                          http://www.metinvestholding.com/en
  21. МТS                                                      http://www.mts.com.ua/eng
  22. Pavlenko & Poberezhnyuk         http://www.p-p.ua/en
  23. Prykarpattya Oblenergo              http://www.oe.if.ua/eng/

[1] Central Intelligence Agency – http://www.cia.gov/library/publications/the-world-factbook/geos/up.html

[2] http://www.kpl.net.ua/en/All_about_Ukrainian_economy_and_exports.html

[3] Centre for CSR Development (2010), Survey “CSR Among Small and Medium-Sized Enterprises” – http://www.csr-ukraine.org/doslidjennya.html

[4] http://sme-finance.info/ua/ukraine/kfw-in-ukraine/

[5] Centre for CSR Development (2010), Survey “Corporate Social Responsibility 2005-2010: Status and Development Prospective – http://www.csr-ukraine.org/publications.html?lang=en

[6] Centre for CSR Development (2010), Survey “Corporate Social Responsibility 2005-2010: Status and Development Prospective” – http://www.csr-ukraine.org/publications.html?lang=en

[9] http://www.kyivstar.ua/

[10] http://companies.kontrakty.ua/rankings/147-rejjting-socialno-otvetstvennykh-kompanijj-ukrainy-2011.html

[11] http://delo.ua/business/initiative

[12] www.csr-review.net

[13] www.csrjournal.com

[14] Law on Basic Principles of State Environmental Policy of Ukraine till 2020 (2010)

[15] Centre for CSR Development (2010), Survey “Corporate Social Responsibility 2005-2010: Status and Development Prospective” – http://www.csr-ukraine.org/publications.html?lang=en

[16]Law on Basic Principles of State Environmental Policy of Ukraine till 2020 (2010)

[17] Ukraine Energy Efficiency Program – www.ukeep.org

[18] http://www.dtek.com/en/corporate-social-responsibility/Events/details/dtek-energy-efficiency-program-and-usaid-project-on-municipal-heating-reform-in-ukraine-started-in-dnepropetrovsk-1

[19] http://www.scmholding.com/en/sustainability/scm_social_projects/energy-efficiency/energy_ranking/

[20] Global Compact Network Ukraine (2009), Survey on Climate Change Perception – http://www.globalcompact.org.ua/img/projects/UN09_maket_ENG%20Final.pdf

[21] Global Compact Network Ukraine (2011), Responsible Supply Chain Management – http://www.globalcompact.org.ua/img/publications/RSCM%20final.pdf

[22] http://www.csr-ukraine.org/laboratory_ethical_procurement.html?lang=en

[23] Centre for CSR Development (2010), Survey “Corporate Social Responsibility 2005-2010: Status and Development Prospective” – http://www.csr-ukraine.org/publications.html?lang=en

[24] http://www.csr-ukraine.org/auchan_case.html?lang=en

[25] http://www.csr-ukraine.org/platinum_bank.html?lang=en

[26] New Perspectives on Women Entrepreneurs – http://books.google.com.ua/books?id=vThcPhxPmOAC&pg=PA251&dq=Ukraine+Business+woman&lr=&hl=nl&cd=11&redir_esc=y#v=onepage&q=Ukraine%20Business%20woman&f=false

[27] Central Intelligence Agency – http://www.cia.gov/library/publications/the-world-factbook/geos/up.html

[28] Centre for CSR Development (2010), Survey “Corporate Social Responsibility 2005-2010: Status and Development Prospective” – http://www.csr-ukraine.org/publications.html?lang=en

[29]/category/enterprise-2020-2?lang=en&lang=en

[30] http://www.csreurope.org/pages/en/enterprise2020.html

[31] Centre for CSR Development (2010), Survey “Corporate Social Responsibility 2005-2010: Status and Development Prospective” – http://www.csr-ukraine.org/publications.html?lang=en

[32] http://www.mama-86.org.ua/images/stories/action-town/indicators-rus.pdf

[33] http://www.ecolabelindex.com/ecolabels/?st=country,ua

[34] http://organic-food.com.ua/prijnyato-zakon-ukra%d1%97ni-pro-organichne-virobnictvo/

[35] Centre for CSR Development (2010), Survey “Corporate Social Responsibility 2005-2010: Status and Development Prospective” – http://www.csr-ukraine.org/publications.html?lang=en

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